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Facts
During a survey, the assessee admitted undisclosed income of Rs.2,72,12,500. However, they only offered Rs.72,12,500 in their return, leading the AO to add the remaining Rs.2 crores. The assessee's primary project was in its initial construction phase with limited sales.
Held
The Tribunal held that the CIT(A) was justified in deleting the addition made by the Assessing Officer. The undisclosed income disclosed in other firms by the same partners was honoured, and the facts supported the CIT(A)'s conclusion regarding the partial acceptance of the disclosure.
Key Issues
Whether the CIT(A) was justified in deleting the addition on account of undisclosed income admitted during a survey, considering the project's initial stage and the partial disclosure offered by the assessee.
Sections Cited
133A, 250
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Income Tax Appellate Tribunal, “B” BENCH, AHMEDABAD
PER DR. B.R.R. KUMAR, VICE-PRESIDENT:- This appeal is filed by the Revenue against the appellate order dated 06.03.2004 passed by the Learned Commissioner of Income Tax (Appeals), Ahmedabad, under Section 250 of the Income-tax Act, 1961, relating to the Assessment Year 2014-15.
The Revenue has raised the following grounds of appeals:
Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) is justified in directing the Assessing Officer to delete the addition made of Rs.2,00,00,000/- being unaccounted income disclosed during the survey in the statement recorded on oath without appreciating the fact that admission of undisclosed income by the assessee is based on the evidences gathered during the course of survey proceedings? 2. Whether on the facts and in the circumstances of the case and in , the Ld. CIT(A) is justified in directing the Assessing Officer to delete the addition made of Rs.2,00,00,000/- being unaccounted income disclosed during the survey in the statement recorded on oath without appreciating the fact the retraction from the disclosure while filing return of income is without any corroborative material? 3. The appellant craves leaves to add, modify, amend or alter any grounds of appeal at the time of, or before, the hearing of appeal.”
1. 3. The assessee is engaged in the business of Real Estate Development and Constructions of residential/commercial complexes. The total turnover of the assessee was Rs.4.11 crores and other income of Rs.73,17,252/- has been credited to P&L A/c. The net profit declared by the assessee was Rs.1,02,83,800/-. During the survey conducted u/s 133A of the Act, the assessee admitted undisclosed income to the tune of Rs.2,72,12,500/-, whereas in the return of income the assessee has disclosed Rs.72,12,500/- as undisclosed income. Since the undisclosed income of remaining Rs.2 crores has not been offered to tax in the return of income, the Assessing Officer, based on the statements recorded during the survey, made addition of Rs.2 crores to the total income.
Aggrieved by the order of the Assessing Officer, the Assessee filed appeal before the Ld. CIT(A) who allowed the appeal of the assessee on the following grounds:- • Survey has been conducted on 11 firms, managed by the same partners • Total amount of Rs.25.52 crores has been disclosed by Shri Nikhil Gajjar and N.G. Patel during the survey which includes disclosure of Rs.2.72 crores on account of the assessee firm which is one among 11 other firms. • The disclosure in all other firms has been duly honoured and taxes have been paid by the respective firms. • The reason for retraction in the assessee firm was that the project was in the initial state of construction and meager sales were booked.
5. Aggrieved by the order of the Ld. CIT(A), the Revenue filed appeal before the Tribunal.
6. Before us, the Ld. DR relied on the order of the Assessing Officer and the Ld. AR supported the order of the Ld. CIT(A).
We have heard the rival contentions and perused the material available on record. We find that there is no material found and impounded by the Revenue Authorities with regard to the disclosure made in the case of the assessee-firm. The partners have disclosed approximately Rs. 23 crores in other 10 firms wherein survey has been conducted along with the assessee-firm. The disclosure was honoured based on completion of the projects and the work-in- progress. The project undertaken by the assessee consists of 12 towers, consisting of 146 one BHK flats and 84 two BHK flats and 5 HK flats - a total of 235 flats. As on the date of survey, the assessee-firm has booked 34 - one BHK flats costing Rs.9.5 lakhs each, and 21 – two BHK flats – costing Rs.14.51 lakhs each. The Ld. CIT(A) held that only 14.81% of the work has been completed in the present project, whereas in other projects undertaken by the other firms substantial work has been done and hence disclosure in the 10 firms to the tune of Rs.23 crores has been rightly honoured and taxes paid by the assessee. After examining the facts, the Ld. CIT(A) rightly concluded that the disclosure of Rs.72,12,500/- out of Rs.2,72,12,500/- is an acceptable proposition. Since the decision of the Ld. CIT(A) is based on complete examination of the material on record, statements of the partners, booking of the flats, work-in-progress, disclosure of Rs.23 crores of other entities, we hereby affirm the decision of the Ld. CIT(A).
In the result, the appeal of the Revenue is dismissed. The order is pronounced in the open Court on 25.08.2025.